Troubled Quebec reseller reveals all

After claiming the 25th spot on CDN’s top 100 solution providers list last year, and after having faced what the company’s president says was a “terrible” first quarter, ProSys-Tec., a Montreal-based Canadian manufacturer of computers, has filed for court protection after 17 years of being in business.

Georges Herbert, president of ProSys, said the company recently filed for court protection with the court’s permission to hopefully be able to re-organize the company.

“We haven’t filed for bankruptcy,” he said. “We had a terrible first quarter and that’s why we were in trouble. To give you an idea, the computers we were selling for $800 two years ago, we were now selling for around $500. It’s a difficult environment now because of the deflation. We still have about 10 employees with the company (but) the rest were let go.”

In addition to its head office location in Montreal, ProSys also has offices in Vancouver, Ottawa, Quebec City and St. Johns. The Canadian-based system builder which reported revenue earnings last year of $40-50 million, has relations with manufacturers such as LG, Intel, Philips and others. The company focused its efforts primarily on the Federal, Provincial governments and the small to medium-sized business (SMB) market spaces and was seen as a leader in the Canadian system builder industry.

After obtaining several court documents, CDN Now has learned that on July 23, Canadian-based distributor, Supercom Canada, had taken ProSys to court in an attempt to either get back product inventory or money. As per the documents, ProSys did not show up to the hearing and so on September 18, a judgement was made ordering ProSys to pay Supercom the sum of $383,433.22 plus interest.

On August 22, ProSys had stated they wanted to abandon the computer assembly business and a month later on September 29, the company told the court it wanted to make an offer to its creditors.

Most recently though, on October 3, the lawyers who are representing ProSys, made a request for a hearing to get a cancellation of the judgement that was made from the Supercom case. This hearing is scheduled to take place next Friday.

CDN Now attempted to contact Supercom about this case, however an executive there said the company will be commenting at a later date.

While in business, ProSys acquired a company called Sona. Sona had previously partnered up with FoxWise Technologies to service the IT needs of customers.

Sam Damm, founder and president of FoxWise, confirmed that while FoxWise is not active at the moment, he says he is still the president of the company.

Gus Isaac, president of Nova Networks, an Ottawa-based VAR that works largely in the services business, and also a previous competitor with FoxWise, said at one time, he considered acquiring FoxWise.

“(ProSys is) part of a messy situation,” Isaac said. “It made no sense for us (Nova) to be associated with them (ProSys). FoxWise was basically drawn into the same mess because of their part ownership with ProSys.”

Isaac said that not long after the ProSys employees were terminated, so were the ones at FoxWise. About a month ago, Isaac said he hired on about five or six of the former FoxWise employees because he wanted them to join the Nova team based on their experience, skill-sets and knowledge in the industry.

“Nova grew maybe only by four per cent after I hired on the FoxWise employees so now we’re at about 125 employees,” he said.

Jim Estill, CEO at Synnex Canada, confirmed that ProSys has been a long-time customer of the distributor.

“We were crediting them,” Estill said. “It didn’t appear from their financial information that they were in trouble.”

Greg Myers, vice-president of marketing at Tech Data Canada, said in general, the reseller credit environment in Canada has been quite stable. Where sales are concerned though, he says the current system builder economy is changing and partners therefore need to adjust accordingly.

“System builders, like VARs in general, need to diversify their activities and their businesses,” he recommends. “VARs have taken up services as margin enhances and with system builders, the value they have there is with the relationships with their customers.”

Myers says there has been an overall shift in the desktop space as of late, with the majority of end-users now looking for notebook solutions. Because of this, he says more and more system builders are now aligning themselves with vendors such as Lenovo and Acer to sell branded technology solutions to their customers.

“As system builders start representing branded clients, the opportunity they have to build servers with all of the latest technology represent new opportunities for them,” he suggests.

Estill adds, “Whenever there’s change, there are major opportunities. System builders have to be fast and creative and (they) have to watch (their) expenses so (they) don’t spend more than (they) make,” he cautions.

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Maxine Cheung
Maxine Cheung
Staff Writer, Computer Dealer News

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